Question

Describe the basic types of responsibility centres. Correlate the measurement of inputs and outputs with reference to different types of responsibility centres

Answer 1

Answer:

There are three types of responsibility centers—expense (or cost) centers, profit centers, and investment centers. In designing a responsibility accounting system, management must examine the characteristics of each segment and the extent of the responsible manager's authority.

Answer 2

What are responsibility centres?

A responsibility centre is an organisational unit whose activities and outputs are overseen by a manager. A responsibility centre is an operational unit or entity inside an organisation that is in charge of all of the unit's actions and tasks. In responsibility accounting, responsibility centres collect and report revenue and spending data.

The five types of responsibility centres are as follows:

1. Cost centres
2. Discretionary cost centres
3. Revenue centres
4. Profit centres
5. Investment centres

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